Corona Virus Hits Metal Industry, NorNickel Reducing Income Goals
Money pours in for the world’s largest producer of nickel and palladium, the Russian corporation NorNickel. Last year its operating result reached USD 7.9 billion. However, the outbreak of the corona virus may hit the company’s economy hard. Demand has dropped in recent weeks.
2019 became another record year for the Russian industrial giant NorNickel, world leader in production of nickel, palladium and also a giant in copper and platinum.
Late February, the company announced that last year’s income increased by 16 percent compared to the year before. Production has increased, as has prices on nickel and palladium.
The operating result reached a whopping USD 7.9 billion.
Drop in demand
The company a.o. operates nickel extraction on the Kola Peninsula and is owner of the very polluting Nikel plant, just a few kilometers from the Norwegian border.
However, NorNickel is now reducing its own expected prognosis for 2020 due to the outbreak of the corona virus in China, or the covid-19 as it is also referred to.
Demand has dropped for several metals, such as nickel and copper. Nickel is, amongst others, used to producing batteries, whereas copper is important in IT and the communications industry.
Due to insecurities related to the duration of the epidemic and the final health effect thereof, we are at present not able to quantify its effect on the demand for and supply of copper, nor can we estimate how long it will take the market to recover, says NorNickel in a statement.
The company further announces that if the virus outbreak is under control by the end of March, it is fair to assume that “the loss in consumption can be recovered within the year, given that China has ample capacity available in the entire copper-demanding value chain”, Reuters says.
Global demand for nickel is slowing down, NorNickel says. While the year-to-year increase reached 26 percent in 2019, the figure for 2020 is currently at 17 percent. The corona virus outbreak has so far killed 3,280 people in China and the rest of the world, according to figures from the WHO.
Chinese authorities have placed restrictions on several parts of the industry, which means it will take a long time to recover lost profits – once the outbreak is over, according to the industry news site Mining Industry.
A sore spot for Norway
The Nikel plant in Petchenga municipality near the Norwegian border has been Norway’s largest source of pollution for decades. Much of its annual emissions of some 60,000 tons of Sulphur dioxide have ended up in Norwegian rivers, lakes and nature. In addition, the production of nickel at the plant emits heavy metals from the production process.
Nickel has previously been much used in the arms industry and for making coins; however, today nickel is used a.o. in batteries.
Mayor of Sør-Varanger Rune Rafaelsen argues that the oligarchs’ behavior is unforgiveable. He wants to prosecute both Vladimir Potanin and Oleg Deripaska, two of Russia’s wealthies men and majority share owners of NorNickel.
“Potanin and Deripaska are the largest polluters in the Arctic and they can well afford to stop these emissions if they so desire. They should be prosecuted. What they do is completely unforgiveable, Rafaelsen said to High North News in May 2019.
Norwegian authorities have for decades tried to reduce emissions from the Nikel plant, both through political pressure as well as through funding support for introducing cleansing technology.
However, NorNickel has now decided to shut down the Nikel plant. A major transition program has been established in the city of Nikel. The plan is for the plant to shut down by the end of October 2020.